Question

Presented below are selected account balances for Homer Winslow Co. as of December 31, 2014.

Inventory 12/31/14 $60,180 Cost of Goods Sold $225,870
Common Stock 75,870 Selling Expenses 17,400
Retained Earnings 48,850 Administrative Expenses 39,150
Dividends 19,080 Income Tax Expense 30,180
Sales Returns and Allowances 13,650
Sales Discounts 15,290
Sales Revenue 411,940

Answer 1

1. Dr Sales Revenue $411,940

Cr Income Summary $411,940

2. Dr Income summary $341,540

Cr Cost of Goods Sold $225,870

Cr Sales Returns and Allowances $13,650

Cr Sales Discounts $15,290

Cr Selling Expenses $17,400

Cr Administrative Expenses $39,150

Cr Income Tax Expense $30,180

3. Dr Income summary $70,400

Cr Retained earning $70,400

4. Dr Retained earnings $19,080

Cr Dividend $19,080

Step-by-step explanation:

Preparation of closing entries for Homer Winslow Co. on December 31, 2014

1. Dr Sales Revenue $411,940

Cr Income Summary $411,940

(Being To close expense accounts)

2. Dr Income summary $341,540

($225,870+$13,650+$15,290+$17,400+$39,150+$30,180)

Cr Cost of Goods Sold $225,870

Cr Sales Returns and Allowances $13,650

Cr Sales Discounts $15,290

Cr Selling Expenses $17,400

Cr Administrative Expenses $39,150

Cr Income Tax Expense $30,180

(Being To close expense accounts)

3. Dr Income summary $70,400

( $411,940 -$341,540 )

Cr Retained earning $70,400

(Being To close net income)

4. Dr Retained earnings $19,080

Cr Dividend $19,080

(Being To close dividends to retained earnings)